Bombay High Court Holds Auction Purchasers on “As Is Where Is” Basis Liable for Electricity Dues Including Theft Charges; Rejects Amnesty Claim: “Once Regulation 10.5 is Repealed, No Rights Flow From It”

Court’s Decision:

The Bombay High Court dismissed a writ petition challenging a communication dated 6 December 2024 issued by MSEDCL, wherein the petitioner was directed to pay Rs. 2,07,24,237/- for electricity theft charges before their application under the Mahavitaran Abhay Yojana, 2024 (Amnesty Scheme) could be processed. The Court upheld MSEDCL’s stand that the theft dues must be paid in full before granting amnesty benefits. It rejected the petitioner’s claim that the earlier Regulation 10.5, which capped liability to six months of unpaid dues, would apply, holding that the 2005 Regulation had been repealed and replaced by the 2021 Regulations.

Facts:

The petitioner purchased an industrial unit through auction in 2008, originally owned by Vishwas Steel Ltd., whose electricity connection had been permanently disconnected in 2001 due to non-payment and alleged theft. The petitioner sought a new connection but was asked to pay arrears of the previous owner. In 2011, the petitioner approached the High Court and was granted interim relief, subject to depositing Rs. 3.35 crores, representing six months’ dues. However, the petitioner never made the deposit.

Subsequently, MSEDCL introduced an Amnesty Scheme in 2024. The petitioner applied for relief under this scheme on 11 October 2024 and offered to pay Rs. 3.35 crores. But by then, a circular dated 3 December 2024 had extended the scheme with an additional condition that permanently disconnected consumers with theft cases must pay 100% of the theft amount. On 6 December 2024, MSEDCL rejected the petitioner’s application unless the theft dues (Rs. 2.07 crores) were also paid. Aggrieved, the petitioner filed the present writ petition.

Issues:

1. Whether the petitioner could claim the benefit of Regulation 10.5 of the 2005 Supply Code despite its repeal in 2021.
2. Whether the additional condition imposed under the 3 December 2024 circular regarding theft charges was valid.
3. Whether the petitioner’s application under the Amnesty Scheme could be considered without payment of the theft charges.

Petitioner’s Arguments:

• The application under the Amnesty Scheme was made before the circular dated 3 December 2024, and hence, the new condition of 100% theft amount should not apply.
• The interim order of 2011 quantified the petitioner’s dues at Rs. 3.35 crores, and the petitioner was willing to deposit that amount.
• The theft charges arose from the previous owner’s conduct, and the petitioner should not be saddled with that liability.
• Regulation 10.5 of the 2005 Supply Code, then applicable, restricted liability to six months’ dues and should continue to apply.
• The decree in favour of MSEDCL was against the previous owner and could not be enforced against the petitioner.

Respondent’s Arguments:

• The 2005 Regulation had been repealed and replaced by the 2021 Regulations, which contain no proviso limiting liability.
• The Amnesty Scheme was governed by the current regulation, and the additional condition was approved by competent authority.
• The petitioner’s purchase was on “as is where is” basis, which includes liabilities on the premises.
• The theft dues had already been crystallised by a civil court decree in 2003.
• The petitioner never complied with the 2011 interim order or deposited any amount in 14 years and had withdrawn the earlier writ petition.

Analysis of the Law:

The Court held that Regulation 10.5 of the 2005 Code, which limited recovery to six months, stood repealed by Clause 12.5 of the 2021 Regulations. Unlike its predecessor, the new clause does not contain any such limitation. Applying the Constitution Bench judgment in Kolhapur Canesugar Works Ltd. v. Union of India, the Court ruled that once a regulation is repealed, no vested right survives unless a saving clause exists. Here, the 2021 Regulations provided no such saving.

Precedent Analysis:

1. K.C. Ninan v. Kerala State Electricity Board (2023 SCC OnLine SC 663): The Supreme Court held that auction purchasers who buy property on an “as is where is” basis are liable for prior electricity dues linked to the premises, including theft charges. The Court reiterated that such liabilities can constitute a charge on the premises, overriding any claim that the dues pertain only to the previous owner. This principle was applied by the Bombay High Court to conclude that the petitioner inherited the liabilities upon purchase.
2. Kolhapur Canesugar Works Ltd. v. Union of India (2000) 2 SCC 536: The Constitution Bench ruled that once a rule or regulation is repealed, no rights can be claimed under it unless explicitly saved by the new legislation. The Bombay High Court cited this to affirm that Regulation 10.5 of the 2005 Code, having been repealed without saving, could not be relied upon by the petitioner.
3. Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers Pvt. Ltd.: Though not the focus, this case was discussed to distinguish between situations with and without statutory backing for demand of prior dues. The judgment emphasized the regulatory power of distribution companies under validly framed supply codes.

Court’s Reasoning:

• The Court emphasized that the petitioner had not deposited the amount under the 2011 interim order.
• The Amnesty Scheme in force was governed by the 2021 Regulations, and any entitlement under the repealed 2005 Code was extinguished.
• The petitioner could not insist on retrospective application of repealed laws.
• The theft charges were not just contingent liabilities but crystallised through a civil court decree.
• By purchasing the premises on “as is where is” basis, the petitioner assumed the liabilities, especially in the absence of a legal carve-out.

Conclusion:

The High Court upheld MSEDCL’s decision to reject the petitioner’s application under the Amnesty Scheme unless the theft charges were paid in full. It held that:

“The petitioner certainly cannot raise a contention that any legal right has accrued in its favour under the Regulation 10.5 of the 2005 Regulation.”

Implications:

This judgment reinforces that auction purchasers of premises take on not only the physical asset but also its embedded liabilities. The repeal of earlier regulations extinguishes any previously existing protections unless expressly saved. It also affirms the right of electricity boards to demand full recovery in theft cases, even under amnesty schemes.

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